PROBLEM 1 A supplier is offering your firm a cash discount of 2 percent if purch

Question

PROBLEM 1
A supplier is offering your firm a cash discount of 2 percent if purchases are paid for within
10 days; otherwise the bill is due at the end of 60 days. Would you recommend borrowing
from a bank at an 18 percent annual interest rate in order to take advantage of the cash
discount offer? Explain your answer.

PROBLEM 2

Assume that you have been offered cash discounts on merchandise that can be purchased from either of two suppliers. Supplier A offers trade credit terms of 3/20, net/70, while Supplier B offers 4/15, net/80. What is the approximate effective cost of missing the cash discounts from each supplier? If you could not take advantage of either cash discount offer, which supplier would you select?




7.
PROBLEM 7

Bank A offers loans with a 10 percent stated annual rate and a 10 percent compensating balance. You wish to obtain $250,000 in a six-month loan.

a. How much must you borrow in order to obtain $250,000 in usable funds? Assume you currently do not have any funds on deposit at the bank. What is the effective annual rate on a six-month loan?

b. How much must you borrow in order to obtain $250,000 in usable funds if you currently have $10,000 on deposit at the bank? What is the effective annual rate on a six-month loan?

c. How much must you borrow in order to obtain $250,000 in usable funds if you currently have $30,000 on deposit at the bank?


d. What is the effective annual rate on a six-month loan?

Explanation / Answer

too many problems in one question.post them separately

Related Questions

Navigate

• Browse (All)
• Browse P
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.